CRA comments on the TOSI excluded share and excluded amount exclusions
2018-0744031C6 indicated that the shares of a corporation that did not generate business income (e.g., a corporation that generated rents that, given the level of activity, constituted income from property) cannot qualify as excluded shares, whereas in Examples 8 and 12 of the December 2017 CRA website Guidance, shares of a corporation earning income from passive investment assets qualified as excluded shares. How should these positions be reconciled?
CRA noted that if in the above example the corporation carried on a business, its shares could qualify as excluded shares. On the other hand, even if it did carry on a business, the amount received from the corporation by the specified individual would qualify as an excluded amount if it were not derived, directly or indirectly, from a related business in respect of the individual for the year.
This response is similar to 2018 APFF Financial Strategies and Instruments Roundtable, Q.2 and 2018 APFF Roundtable, Q.9(a).